Is This the End for San Francisco's Most Controversial Startup? Shocking Move to NYC Reveals Hidden Secrets!

Cluely, a promising startup known for its AI-driven applications, is making headlines as it attempts to offload its three-floor headquarters in San Francisco's SoMa district just six months after moving in. According to CEO Roy Lee, the company is relocating to New York due to legal complications surrounding their current office space, which is strictly zoned for commercial use.

“Work-live… is extremely important to the company,” Lee stated, emphasizing the significance of a flexible working environment for his team. He believes that New York offers a more robust ecosystem for consumer startups and content creation, which are crucial elements for Cluely's future. However, as of now, there is no set timeline for the move.

When The Standard visited Cluely's office in July, it became evident that the startup had blurred the lines between living and working, with six employees residing within the premises. Additionally, nearly a dozen others, including content creators, were temporarily housed across the street. This arrangement led to a complaint filed with the San Francisco Planning Commission, which is currently under review. The complaint highlighted living conditions that included “open mattresses under stairs.”

This swift relocation comes on the heels of Lee's candid admission at the recent TechCrunch Disrupt conference, where he acknowledged that the initial excitement surrounding their AI app may not be enough to ensure its long-term success. The app, dubbed as a “cheat on everything” tool, provides real-time analysis and note-taking but has faced scrutiny regarding its market fit.

“I can’t say if it’s a mistake, but maybe we launched too early,” Lee reflected during the conference. “The whole idea [was], let’s launch something that barely works, and if we can get enough initial users, they will become the power users; they will find out the use cases for us.”

Despite previous claims of impressive user metrics, Lee chose not to disclose specific numbers during the TechCrunch event, stating only that the company is performing better than expected but not at the pace he had hoped.

Cluely, which had repositioned itself as an AI meeting assistant capable of tasks such as sending follow-up emails, faces stiff competition in a crowded field that includes established players like ChatGPT and Otter.ai. Lee explained the shift to a notetaking tool was a strategic response to the needs he identified in the market, as he sees it as one of the only consumer-oriented AI applications that genuinely adds value.

“If the models plateau here, then we become the best AI notetaker,” he noted, while also acknowledging that the company’s future is contingent on the evolution of AI technology. “If the models get ridiculously better, then you saw the video yourself,” he added, referring to Cluely's viral launch video that showcased the technology's potential, garnering over 13 million views on social media.

Initially founded at Columbia University, Cluely gained notoriety for its controversial AI tool aimed at helping students cheat in coding interviews. Both Lee and co-founder Neel Shanmugam dropped out after facing disciplinary action, eventually moving to San Francisco to scale their startup.

In a market increasingly driven by social media virality, last summer's office environment felt more akin to a Los Angeles content creator mansion than a traditional Silicon Valley workspace. Lee had previously proclaimed, “We are the kings of distribution and the kings of virality,” suggesting a commitment to leveraging social platforms for growth.

As Cluely navigates this transitional phase, the move to New York could signify a new chapter. With $15 million raised from Andreessen Horowitz earlier this year, and a reported $7 million in annual recurring revenue alongside 100,000 users concentrated in the U.S., the company is poised for what could either be a comeback or a cautionary tale in the fast-paced tech landscape.